Paul, Weiss, Rifkind, Wharton and Garrison paid a multimillion-dollar settlement to force out its first openly transgender partner, according to a New York Times report. Managing partner Scott Barshay believed the lawyer's public transgender identity would alienate clients, prompting the firm to negotiate a confidential buyout agreement.
The settlement required the partner to leave the firm and maintain silence about the circumstances. The arrangement included financial compensation in exchange for a non-disclosure agreement restricting the lawyer from discussing the departure publicly or with other parties.
This case raises serious employment law questions. Employment discrimination based on gender identity violates Title VII of the Civil Rights Act of 1964 as interpreted by the Supreme Court in Bostock v. Clayton County, 140 S. Ct. 1731 (2020). New York State law and New York City administrative code also prohibit discrimination based on gender identity. The use of a confidentiality clause to suppress evidence of alleged discrimination creates additional legal exposure under Section 21(e) of the Securities Exchange Act and potential whistleblower protection statutes.
The arrangement exposes Paul, Weiss to multiple legal risks. Confidentiality agreements that prevent disclosure of unlawful conduct are generally unenforceable. The Securities and Exchange Commission and Equal Employment Opportunity Commission have increased scrutiny of nondisclosure agreements that silence victims of discrimination. Regulatory agencies view such agreements as obstructing investigation and enforcement of civil rights laws.
For the legal industry broadly, this situation illustrates persistent obstacles to LGBTQ inclusion despite legal protections. Law firms managing diversity and inclusion programs must ensure compliance with anti-discrimination statutes. Settlement agreements that conceal discriminatory conduct invite regulatory investigation and reputational damage.
The partner may retain claims against Paul, Weiss for discrimination, tortious interference, breach of contract, or